In normal market conditions if security has negative beta

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Reference no: EM132056777

1. In a portfolio of risky assets, the response to a factor, Fi, can be determined by:

a. Summing the weighted bi s and multiplying by the factor Fi.

b. Summing the Fi s.

c. Adding the average weighted expected returns.

d. Summing the weighted random errors.

e. None of the other answers.

2. In normal market conditions if a security has a negative beta, the:

a. Security always has a positive return.

b. Security has an expected return above the risk-free return.

c. Security has an expected return less than the risk-free rate.

d. Security has an expected return equal to the market portfolio.

e. None of the other answers.

3. Shareholders discount many corporate announcements because of their prior expectations. If an announcement causes the price to change it will mostly be driven by:

a. The expected part of the announcement.

b. Market inefficiency.

c. The unexpected part of the announcement.

d. The systematic risk.

e. None of the other answers

Reference no: EM132056777

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